The Art of the Refund

[John Scott]

The Art of the Refund

[nks]

Wonderful and well written! I totally agree with what you've said. In some way, refunds inspire trust and confidence for the company. In the real practical world, it is positive that some of these large enterprises gain customers by having Refund policy laid out clearly, whereas we don't find them in small businesses (typically, it is hard).

I'm happy to see that V7N has adopted such a genuine approach to improve customer's relationship to gain trust and confidence. I'm happy to be a member here.

[Maikunari]

It's true that a company that will refund your money if you are unhappy with it's service is an honorable company. The idea of not refunding money when it was the company's mistake is just incomprehensible.

[thePro]

excellence. loved it.

[Natural Elements]

You forgot also all the compagnies who try to lock you into contracts that benefit only them. Most contracts are not necessary, they just want easy money and whatever the service provided you need to pay.

[photocrats.com]

We’ve refunded $7,000+ in Contextual orders, and then paid (out of my own pocket) blog publishers to place the links and fulfill the orders.

[John Scott]

Originally Posted by photocrats.com

You have a question?

[NothingButNet]

Originally Posted by John Scott

You have a question?

I know what you mean, I paid some refunds in my life too and experienced positive reactions from my clients. But I have a question: how did this happen (for you to pay such huge refunds)? Are the bloggers really so slow? As far as I know you pay better than other services of the kind and the bloggers can write about whatever they want, the most important thing is to use the alternative text and the link you provide within the context of an article. Or have I misunderstood the concept?

[John Scott]

Originally Posted by NothingButNet

I know what you mean, I paid some refunds in my life too and experienced positive reactions from my clients. But I have a question: how did this happen (for you to pay such huge refunds)? Are the bloggers really so slow? As far as I know you pay better than other services of the kind and the bloggers can write about whatever they want, the most important thing is to use the alternative text and the link you provide within the context of an article. Or have I misunderstood the concept?

In the beginning, we had a very sharp learning curve. Order fulfillments were delayed because we were sending out assignments to bloggers who weren't responsive. Over 80% of assignments went un-answered by bloggers.

And it isn't a huge amount if you consider that it is only $7,000 out of close to $100,000.

[photocrats.com]

Originally Posted by John Scott

You have a question?

No

[guy savage]

Great Article. Another thing that I would add is that by showing how easy it is to get a refund you actually lower the barriers to getting people to do business with you in the first place.

Especially online, where there is usually hesitation with the first transaction.

[Owen]

Great post John, I just had to blog about it. Here's my take:

Personally I believe this is the right way to go about things. One disgruntled customer can cause a huge amount of damage to your reputation and there’s nothing that upsets a customer more than paying for a product/service that doesn’t deliver. Instead of refusing a refund, use that customer to find out what doesn’t work for him/her and then incorporate that feedback in to your development process. Not only will you have the opportunity of winning back that customer, but your service would have matured into something that is more valuable for future customers.

[joe-d]

Great post John!

IMO, easily giving up refunds is also not good. What is needed is a service/sales agreement that will serve as a guide and basis if one is entitled for a refund or not. This will minimize the risk of fraud and invalid claims.

--Joe

[yorije]

So you have learned from experience and learned it well.

[factoring]

I own a jet ski rental company in Rhode Island. I started the business at 19 years of age. We have 60 days out of the entire year to make our money(Short summer season). So a one hour rental for $100 is a big deal if that person wants their money back.

Anyways, my first summer running the business, a group of people decided to rent four jet ski's for a couple hours. It came to a total of $800. This is a lot of money when you are just starting a new business.

There time was up and they weren't in sight. One of the jet ski's ran out of gas. They all wanted their money back because they wasted their time towing one of the ski's in.

I refunded their money with no objections. It was hard to do, cause I needed the money.

What I didn't know was that the people who rented the jet ski's worked at a local restaurant. They have come back and rented so many times and have sent so many referrals, they easily paid off the four jet ski's they rented over the past couple of years.

I take what John said to heart and believe that is the only way to run a business. Good article John.


Andrew

[John Scott]

Thanks

[Ian C]

Excellent issue raised by John.

I'd like to add my 2 cents to it...

Refunds are the extra bit of weight that tip the balance for hesitant buyers.

However, offers for refunds that make a real difference to your sales need to be BIG - just refunding someone their money back isn’t the be all and end all. Your refund process needs to be hassle free and should be clearly stated as such on your website. Better yet, your refund offer should be remarkable in some way.

I set up a tutoring business www.vancouvertutoringservice.com - Vancouver Tutoring Service, which is doing quite well, and most of the visitors are sold on the bold and clearly worded refund:

“If after 12 weeks you don’t see at least 1 FULL letter grade improvement, we’ll continue to tutor you for 6 weeks FOR FREE!”

It’s clear, it’s simple and it’s worth remarking upon.

But will you be scammed by offering an outrageous refund?

Absolutely… but so what?

A small percentage of people will use your offer to get something for nothing, but the cost will be greatly offset by the increase in business that you pick up when you give your prospects a reason to feel confident and take a chance on your business.

Think about that idiot (or is he a genius?) who’s been hawking Ginsu knives on late night TV for the last 20 years. That guy has an outrageous guarantee and yet he’s still in business and hasn’t to my knowledge been sued for false advertising. Why is it working for him?

The answer lies in the fact that most of your customers will be happy with your product or service, and of those that are not, only about 20% of them will actually invest the effort to request a refund. So don’t be afraid that offering an outrageous refund guarantee is going to suddenly bankrupt you.

A clearly worded easy to receive remarkable refund is a powerful tool for increasing your online sales.

And one last thought… If you have a good refund, don’t hide it. Plaster it all over your site. And be sure to have it conspicuously near any part of your site that is asking your visitors to make a commitiment.

Best wishes…

Ian C

[Ian C]

And I almost forgot... in order to get the maximum benefit of a refund (customer retention) it is critical to do it promptly. If the customer has to hound you for it or if it takes days or weeks, you will be unlikely to keep the customer.

However, if you refund quickly and with a minimum of hassle this creates strong good will and the customer will be much more likely to buy from you in the future and spread positive word of mouth about your business.

It has always boggled my mind why some businesses make refunds so difficult... if you're going to do it, do it right and get the full benefit! =p

Ian C